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In the first part of the day, we saw a relatively strong reaction in the markets to what now seems an almost certain victory for the Republicans. Furthermore, in addition to the presidential election, the Republican Party has a very strong chance of winning in both the Senate and Congress.
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At the time of publication, Republicans have secured 51 seats in the Senate, while Democrats hold 41. In the presidential race, Donald Trump is leading with 246 electoral votes, while Kamala Harris has 187. In Congress, the Republican House leads with 191 votes, while Democrats have 158 votes.
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In the financial markets, there is a strong response in favor of Trump’s policies. The market anticipates a rise in protectionism and tax cuts, an extension of the policies from the 2016 election.
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The dollar index is up 1.66%, breaking above 105 points for the first time since June this year, during a period of the Fed’s pivot and the beginning of rate cuts. However, markets are concerned about the return of inflation and the potential for the Federal Reserve to shift course again in the longer term. Thursday’s decision to cut interest rates is largely certain.
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U.S. stock indices are recording strong gains, with the US500 and US100 up 1.25%, close to historic highs. Meanwhile, the small-cap US2000 index is up 2.75%, breaking out of its consolidation zone to reach 2,345 points.
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Yields on U.S. bonds are also experiencing a strong upward move. Currently, the 10-year bond yields have risen to 4.41%, and the 2-year bond yields to 4.27%.
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In the Asia-Pacific region, reactions to the election are mixed. We are seeing significant sell-offs in Chinese indices, with declines between 1.50-2.20%. Investors are concerned about increased tariffs on Chinese goods, trade restrictions, and further restrictions on technology transfer.
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In other markets, such as Japan, Australia, and Singapore, indices are recording moderate gains of between 0.50-1.60%. The biggest gain is seen in Japan’s JP225 index, up to 39,650 points (+1.65%).
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The most exciting gains, however, are observed in the cryptocurrency market. Trump was a favorite among investors in this market, thanks to his many promises of positive support for the industry’s further development in the U.S. Bitcoin is up 8.00% to $75,000, breaking its historical high. Ethereum is up 7.70% to $2,600, and other altcoins are up 6.90%, bringing the total market capitalization to $640 billion.
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Dogecoin, strongly associated with Elon Musk, who was heavily involved in the elections, is up 23% to $0.20 per token.
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